Professional Documents
Culture Documents
16.
(10)
Simple contract
Formal Contract
Contract of Record
Judgement of Court
Obligation imf by court upon one or more parties in favour of other 17. Time barred debt Indian limitation act, 1963 A debt is said to be time barred on expiry of 3 years from the due date, if the amount has not been recovered and also no action has been taken for recovery of the amount. A time barred debt is not recovereable. A written promise to pay time barred debt & signed by the premisor or his duly authorized agent is valid. A person who pay time barred debt, in ignorance of Indian Limitation Act, 1963 (Indian Law), cannot recover it back. In case of appropriation of payment, if debtor does not mention the debt against which payment is to be adjusted, then creditor may appropriate it to the debt first in time, whether time barred or not.
18.
Contract
Implied
Express
Implied by law
Implied by action
Oral
Written
Tacit Contract
In commercial & Business Agreements, the intention of parties to create legal relationship is presumed to exist.
General offer An offer made to the public at large. Anyone having knowledge of the offer can accept this offer by complying with the terms of offer. Specific offer An offer made to a specified person. This offer can be accepted only by the person to whom it is made. Cross offers When two persons exchange identical offer in ignorance of each others offer. Two cross offers cannot make a contract. Counter offer Qualified acceptance to the offer & counter offer amounts to rejection of the original offer. Standing / open / continuing offer An offer which is allowed to remain open over a period of time. Tender for supply of goods is an example of General offer & standing offer.
(4) (5)
5. Examples of invitation to offer (1) Advertisement (2) Window display of goods by shopkeeper (3) Quotations (4) Catalogue (5) Price list (6) Advertisement in a newspaper for auction sale (7) Initial public offer (IPO) of a company (8) Prospectus issued by an institute. 6. Rules regarding valid acceptances (1) Acceptance must be absolute and unqualified. (2) Mere silence is not an acceptance. (3) Acceptance must be communicated. (4)
Mode of Acceptance
(5)
7.
An acceptance is to offer what is a lighted match is to a train of gunpowder [Sir William Anson]
Communication of offer and acceptance Communication of offer is complete when it comes to the knowledge of the person to whom it is made (i.e., when the letter of offer reaches to offeree). Communication of Acceptance is complete a) As against the progress When it is put into the course of transmission to him so as to be out of power of the acceptor to withdraw the same 9i.e, when letter of Acceptance posted). b) As against the acceptor When it comes to the knowledge of the proposer. (i.e, when letter of Acceptance reached to proposer) Communication of Revocation is complete:a) As against the person who makes it, when it is put into the course of transmission to the another person so as to be out of power of the person making it. b) As against the person to whom it is made, when it reaches to him. Other Important Points A bid at an auction sale is an implied offer to buy. A proposal is revoked by death or insecurity of the proposer, if the fact of insanity or death comes to the knowledge of the accepter before acceptance. An agreement to agree in future is invalid. Meaning of Terms Offeror The person who makes the offer. Offeree The person to whom offer is made. Promisor The person who makes the promise. Promisee The person to whom promise is made.
8.
9.
CHAPTER -3 : CONSIDERATION
1. Consideration [Sec 2(d)] When at the desire of the promissee, the promise or any other person has done or abstained from doing or, does or abstains from doing or promise to do or to abstain from doing something. Such an act or abstinence or promise is called consideration for the promise. Technical word Quid pro quo ie., something in return. Legal rules regarding consideration 1. Consideration must move at the desire of the promisor. 2. Consideration may move from the promissee or any other person 3. Executed Consideration Consideration which has been given 4. Executory Consideration Consideration to be moved in future.
2.
Consideration may be past, present or future. Consideration should be real & not illusory. Consideration need not be adequate. The performance of an act what one is legally found to perform is not consideration for the contract. 9. Consideration must not be unlawful immoral or opposed to the public policy. 10. There can be a stranger to a consideration but there cannot be a stranger to a contract. 3. Exception to a third party or stranger to a contract cannot see. 1. Trust Beneficiary can sue 2. Family Settlement Other family members can sue. 3. Marriage contract Female member for her marriage expenses on partition of HUF. 4. Acknowledgement of liability 5. Assignment Assignee can enforce upon the contract. 6. Covenant Running with laud No Consideration, no contract (An agreement without consideration is void). [Section 25] Exceptions: 1. Agreement on account of natural love and affection. This means there is a :a) Written legal agreement b) On accounts of natural love & affection c) Parties standing in near relative 2. Compensation for past voluntary services 3. Promise to pay time barred debt:a) In writing b) Signed 4. Agency 5. Completed gift 6. Charity 7. Bailment
5. 6. 7. 8.
4.
2.
3. 4.
5. 6. 7. 8.
1. 2. 3. 4. 5. 6.
Alien enemy Statutory corporation Municipal bodies Sovereign status Ambassadors & Diplomatic couriers Convict Insolvent
9.
Alien Enemy
Suspended
Dissolved
A contract with incompetent person is void-ab-initio. Position of Minors Agreement 1. An agreement entered into by or with a minor is void-ab-initio [Mohiri Bibi Vs. Dharmodas Ghose] 2. Minor can be beneficiary 3. Minor cannot become a partner but he can be admitted to the benefits of partnership with the consent of all partner. 4. Minor can always plead minority. 5. Ratification on attaining majority is not allowed. 6. Contract by minors guardian is valid if it is within the scope of guardians authority and it is for the benefit of minor. 7. Minor is not personally liable for necessaries supply to him but minors property is liable, not only for necessary goods, but also for necessary services. [Nath Vs. Inman] 8. Minor can be an agent but cannot be held personally liable for breach of duty or negligence. 9. A minor cannot be declared insolvent because he is incapable of contracting.
3.
c) Fraud or d) Misrepresentation or e) Mistake. Coercion [Sec.15]- Coercion is committing or threatening to commit a act forbidden by IPC or the unlawful detaining or threatening to detail any property to the prejudice of any person, whatever with intention of causing him to enter into an agreement. A threat to commit suicide amounts to coercion. A person to whom money has been paid or anything delivered must repay or return it. Undue influence [Sec.16] A contract is said to be induced by undue influence where the relation subsisting between the parties are such that one of the parties is in a position to dominate the will of another and uses that position of obtain an unfair advantage over the other. A person is in a position to dominate the will of another where he holds real or apparent authority over the other or stands in fiduciary relation to the other. Fraud [Sec.17] (Intention To Deceive) a) the suggestion as a fact which is not true by one now does not believes it to be true b) Active concealment of fact by one having knowledge or belief of the fact c) A promise mode without any intention of performing it d) Any other act fitted to deceive e) Any such act or omission as to law specially declared to be fraudulent Exception : Mere silence is not a fraud Where it is the duty of person to speak Where silence is equivalent to speech Misrepresentation Where a person asserts something which is not true though he believe it to be true. A contract induced by Coercion, undue influence, fraud or misrepresentation is voidable. Mistake
4.
5.
6.
7.
Mistake
Mistake of fact
Mistake of Law
Unilateral
Bilateral
Indian Law
Foreign Law
Valid
Valid
2.
3.
Contract is inseparable
Legal Part
Illegal Part
Valid 4. 5.
Void
Wagering Agreement It is an agreement involving payment of a sum of money upon the determination of uncertain event. Other Important points Compromise of public offence is illegal Maintenance - Promotion of litigation in which one has no interest. Champerity It is a bargain whereby one party agrees to assist another in recovering property, with a view to sharing the profits of litigation. All agreements on account of champerity and maintenance are neither void nor valid. Some of them may be void, some of them are valid. An agreement which provides for a reference to arbitration instead of court of law is valid even if it is in restraint of legal preceding.
7.
8.
Late performance
9.
Late performance
Reasonable time expired Time is essential Late performance Promisee Accepts No compensation without notice
10.
11.
Impossibility of Performance
Supervening Impossibility Initial Impossibility
Known to parties
Unknown to parties
Void
Valid
Compensatory
If debt to be discharged is not indicated by the Debtor, then creditor may apply it in discharge of debt in order of time, whether time barred or not. Novation Old contract is cancelled & new contract is formed. Recession Old contract is cancelled, no new contract is formed. Alteration Changing in the terms of original contract parties must remain same. Remission To remit or waive off the performance by promise. In case of voidable contract, if aggrieved party rescind the contract, it must return the benefit received there under. Void Contract / Agreement - Either restore back the advantage received or pay compensation for it. Discharge of contract by Actual or attempted performance Mutual agreement Novation, Alternation, Remission, Recession. Impossibility of performance.
20.
Lapse of time eg. Time barred debt. Operation of law such as death or insolvency. Actual or anticipatory Breach. Where the performance of promise by one party depends upon the prior performance of promise by the other party, such promises are mutual & dependent.
Damage = Contract Price Market price in date of Breach. Damage = Market price on date of Breach Contract price
8. Remedies for Breach of Contract Right to rescind the contract Right to claim damages Right to continue the contract Suit upon Quantum merit (as much as is earned or according to the quality of work done) Suit for specific performance Suit for injunction Injunction order is issued by the court when a party do what he promised not to do. Other points : A contract is not frustrated by commercial impossibility In case of anticipatory breach, the aggrieved party may treat the contract (a) As discharged and bring an immediate action for damages (b) As operative and wait till the time of performance arrives. A party entitled to rescind the contract, loses the remedy where (a) He has ratified the contract
(b) (c)
The third party acquired the right in good faith Contract is not separable and recession is sought of one part only.
An Event happens
Valid
Void
An event happens
The basis of quasi contractual relations is the prevention of unjust enrichment at the expense of others. Contract Contingent Future conduct of living person Void due to impossibilities of an event due to conduct of such person An event happens within time Contract Contingent An event happening An event does not happens within time Happening of an event becomes impossible within time An event happens within time Contract Contingent
Valid
Void
Void
Void
An event does not happens within time Happening of an event becomes impossible within time
Void
Valid
Contract Contingent
Void
QUASI CONTRACT
Right in rem Right against the entire world. Right in personam Right against a particular personam. Quasi contractual right is a right in personam. Quasi contracts are implied by law.
Claim for necessaries supplied to an incompetent person, supplier can recover the price from the property of such personam. Right to recover money paid for another. Obligation of a person enjoying the benefit of non gratuitous act. Responsibility of finder of goods same as bailee. A person to whom money has been paid or anything delivered under coercion or by mistake must repay or return it.
3.
14. 15.
On attaining majority or obtaining knowledge of the fact that he is a partner in a firm Within 6 months Public notice Elect to become partner or not
No public notice is regd. If he want to continue as partner Public notice given Not to become a partner His share is not liable after the date of public notice 16.
Minor has right to sue partners for accounts for payment of his share but only when severing his connection with the firm.
2. 3. 4.
Right to dissolve the firm with the consent of all partners. In case of Partnership at Will, by giving notice in writing to other partners of his intention to do so.
Partnership at will No duration and no particular venture is fixed. Particular partnership For particular adventure or particular time period ( Duration) Duties of partners Duty to carry on business to the greatest common advantage. Duty to accounts for profits earned from any transaction or business connection of the firm or from use of firms property or firms name. Duty not to carry on competing business as to that of partnership firm. If carries on, must account for and pay all the profits to the firm but firm will not be liable for any loss under competing business. Duty to be just & faithful to each other. Duty to render true accounts. Duty to indemnify the firm for loss or damage due to his fraud or willful neglect. Duty to attend his duties diligently Duty not to claim remuneration. Duty to contribute equally to the loss of firm, unless otherwise agreed. Acts beyond Implied authority of partner Submission of dispute for arbitration Compromise or relinquish of any claim Withdraw a suit filled on behalf of firm. Admit any liability in a suit against the firm. Acquire an immovable property on behalf of the firm. Transfer immovable property belonging to the firm. Opening a bank account on behalf of firm in his own name. Enter into partnership on behalf of the firm. If any money received on behalf of the firm is misapplied by any partner, then all the partners as well as firm are liable to third parties. A partner can be expelled from the firm provided:a) Power of expulsion existed is a contract between part. b) Power has been exercised by a big majority of partners & c) Power has been exercised in good faith which means:i. Expulsion must be in the interest of partnership. ii. Notice is served to the partner. iii. Opportunity of being heard is given. If the partner is otherwise expelled, the expelled is null & void.
5.
6. 7.
8.
Registration of partnership is complete when registrar of firms file the statement & records an entry in the register of firm. Non registration of firm does not affect the right of third parties against the firm or its partners. Dissolution by Agreement (a) Insolvency of all partners. (b) Business becoming unlawful. (c) Notice of Dissolution by partner where partnership is at will. Subject to agreement between partners, on happing of following :a) Efflux of time b) Completion of venture c) Death of a partner d) Insolvency of a partner
Dissolution by court Partner becoming of unsound mind. Permanent incapacity of a partner Misconduct of a partner affecting business. Willful or persistent breaches of agreement by a partner Transfer or sale of whole interest by a partner Improbability of business being carried on save at loss On other equitable ground as court satisfies Consequences of Dissolution Partners continue to liable until public notice is given. A partner can find the firm for acts done after dissolution of firm which are related to winding up or to complete unfinished transactions. Partners are liable to repay to new partner reasonable amount of premium.
Constructive Delivery Without change in custody of thing. Document of a title to goods B/L, Dock warrant, warehouse keepers, Certificates, Wharfinger certificate, Railway receipt, multimodal transport document. Mercantile Agent Who is having in customary course of business an authority (a) To sell the goods or (b) To consign the goods for purpose of sale or (c) To buy goods or (d) To raise money on security of the goods. Property Means general property, not special property. Insolvent Who ceased to pay his debts in the ordinary course of business or cannot pay his debts when they become insolvent. Contract of Sale is a contract whereby seller transfers or agrees to transfer property in goods to the buyer for a price. Price is the monetary consideration for sale of goods. Border - when goods are exchanged for goods. Sale When goods are exchanged for goods & price. (a) In case of sale, ownership & risk is transferred to the buyer. (b) But in case of agreement to sell, it is not transferred. Bailment is the deliver of goods from one person to another for some specific purpose, on a condition that, when the purpose in accomplished the goods shall be retire or disposed of f according to the direction of the person delivery them. In case of Bailment, only possession is transferred not the ownership. Unless otherwise agreed, stipulation as to payment of price is not essence of contract. But stipulation as to delivery of goods is regarded as an essence of contract. Condition essential to the main purpose of contract breach of which give right to repudiate the contract & to claim damage. Warranty Collateral to the main purpose of contract. The breach of which give rise to right to claim damages but not a right to reject the goods & treat the contract as repudiated. Breach of conditions may treated as breach of warranty but breach of warranty cannot be treated as breach of condition. Implied conditions (a) Condition as to title (b) Sale by sample as well as description (c) No implied condition as to quality or fitness (d) Condition as to wholesomeness. Implied warranties (a) Implied Warranties was to undisturbed possession. (b) As to non existence of encumbrances (c) Disclosure of dangerous nature of goods (d) As to quality or fitness by usage of trade Caveat emptor Let the buyer beware Exemption :(1) Buyer make known to the seller the purpose of purchase & relies upon sellers skill & judgement. (2) Goods purchased under patent name or brand name (3) Sale by description (4) Sale by sample (5) Sale by sample as well as description (6) When quality or fitness is not defined by usage of trade (7) Fraud or misrepresented by seller.
28.
29.
30.
Appropriation of goods - Selection of goods for the purpose of using thus in the performance of contract and with the mutual consent of seller and buyer. In case of unascertained goods, property is passed to the buyer when the goods are ascertained and they are unconditionally appropriated to the contract. In case of cash sales, property passes only when the case is paid for. Nemo dat quod non label no one can give what he has not got Exception to sale by non owner (1) Sale by Mercantile Agent (2) Sale by one of joint promiser (3) Sale by person in possession under voidable contract provided contract has not been rescinded until sale (4) Sale by unpaid seller (5) Sale by official receiver as (6) Sale by finder of goods (7) Effect of estoppels (8) Sale by one who already sold the goods but continuous in possession thereof. Unpaid Seller (1) When whole price has not been paid or tendered & seller has immediate right of action for the price (2) A bill of exchange or other negotiable instrument was given for payment but the same has been dishonoured, unless this payment is absolute & not a conditional are. Right of lieu is a right to retain possession while right of stoppage of in transit is a right to regain possession. Right of stoppage in transit can be exercised only. When buyer is insolvent. Unpaid sellers right Against Goods Against Buyers (1) Right of lieu (1) Suit for price (2) Right of stoppage in transit (2) Suit for damages for non acceptance (3) Right of Resale (3) Suit for damages for bread (4) Suit for interest Right of stoppage in transit starts where right of lieu ends. Auction Sale It is mode of selling property by inviting bids publicly & property is sold to the highest bidder. An auctioneer is an agent governed by law of agency If seller makes use of pretended bidding to raise the price, the sale is voidable at the option of buyer. Contract of sale and Bailment are species of general contract. Sale may be absolute conditional or contingent. Finder of goods can sell the goods if the owner of goods cannot be found with Reasonable due diligence. Unless otherwise agreed, the expenses of delivery shall be from by seller. Unless otherwise provided, buyer shall apply for delivery. It time is not fixed for delivery, it must be delivered by the seller within reasonable time. Money does not include old coins & foreign currency. In an auction sale of bidders make an agreement, refraining from bidding against each other, such an agreement in valid. Where goods are put for sale in lots in a sale of goods by auction, each lot prima facie deemed to be separate contract of sale. Any seller of goods by auction may bid if he reserves his right to bid by notice to the public. Right to lieu can be exercised for price only.
36.
The sale of goods Act, 1930 deals with the movable goods only. A contract of sale may be a sale or agreement to sell. Document showing title to goods in different from document of title to goods. In a hire purchase agreement the hirer has an option to buy the goods.